Dubai harbours global port success, but will not be contained

To many in the UK, Dubai is best known as a tourism and entertainment hub, perhaps a good bet for some winter sun. Its role as a leading global trading centre is less well known. However, it is the latter aspect of Dubai which is, we think, both the most important and interesting part of its story.

Global ports operator “DP World” epitomises this element of Dubai. Having begun with one asset in Dubai in 1972, the company today operates 78 terminals across 40 countries. In 2016, it handled 64 million TEU (twenty-foot equivalent units), the ubiquitous, work-horse containers of global trade.

We like this company, not least for its core role in Dubai, and its strong global diversification. Its long end bonds have this year performed particularly strongly. However, for the general observer, it is DP World’s experience of and take on global trade that is most interesting.

Yesterday, the company reported its first half results, and the read-across is solid. Firstly, consolidated volumes of TEU were up by +4.7% YoY on a like for like basis. Secondly, performance in the company’s three major regions was healthy. In the Middle East, Europe, and Africa, volumes increased +4.2% YoY, driven by the UAE and the UK. In Asia Pacific and the Indian Subcontinent, volumes increased a respectable +2.9% YoY. Finally, in Australia and the Americas, volumes gained +13.5% YoY, driven by the latter region.

This sound performance is, importantly, expected to be maintained in the second half of the year. This augurs well for both emerging and developed economies, and also serves to highlight, once again, Dubai’s under-appreciated role as a key link in global trade.

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For Professional Investors only and not to be distributed to or relied upon by retail clients.

The opinions presented are those of Kames Capital fund managers as at the time of publishing and may change as subsequent conditions vary. They are not intended to be relied upon as a forecast, research or investment advice, and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Companies mentioned may not necessarily be held in any of Kames Capital funds. The information and opinions contained in these pieces are derived from proprietary and non proprietary sources deemed by Kames Capital to be reliable, are not necessarily all inclusive and are not guaranteed as to accuracy. Reliance upon information in this material is at the sole discretion of the listener/viewer.

This site is not intended for use by any US persons (being residents of the United States of America or partnerships or corporations organised under the laws of the United States of America or any state, territory or possession thereof), who are excluded from the content in this site.